The firefights between Senator Ted Cruz (R-TX) and Donald Trump took up most of the attention last evening, but the late fisticuffs between Cruz and Senator Marco Rubio (R-FL) were far more substantive. The two clashed on a number of issues; accusations flew hot and heavy.
Who was right? Here’s our fact-check.
Is Ted Cruz’s Tax Plan a Value-Added Tax? Last night in the debate, Rubio blasted Cruz’s tax plan as a “value added tax,” and described it thusly:
It’s called the value added tax. And it’s a tax you find in many companies in Europe. Where basically, businesses now will have to pay a tax, both on the money they make, but they also have to pay taxes on the money that they pay their employees. And that’s why they have it in Europe, because it is a way to blindfolded the people, that’s what Ronald Reagan said. Ronald Reagan opposed the value tax because he said it was a way to blindfold the people, so the true cost of government was not there for them. Now, you can support one now that’s very low. But what is to prevent a future liberal president or a liberal Congress from coming back and not just raising the income tax, but also raising that VAT tax…
Cruz responded by stating that the “business flat tax in my proposal is not a VAT. A VAT is imposed as a sales tax when you buy a good…this 16 percent business flat tax enables us to eliminate the corporate income tax.”
He then bashed Rubio’s far higher tax rates, and said that Reagan advisor Art Laffer backed his tax plan.
So, is Cruz’s plan a VAT? And are VATs all that terrible?
A VAT is subtraction-method value-added tax. What that means is that businesses could not deduct profits and wages from their own taxes – they’d pay taxes on the income they receive prior to paying their employees.
On the one hand, this is a better system than the current system. On the other, it’s a double problem, firstly because the tax is hidden – people never see the business paying the taxes, they just feel the impact in their wages – but also because if the rates rise, businesses die. Cruz says his tax plan lowers taxes so much elsewhere that the trade-off is worth it; his plan to get rid of payroll taxes, he says, offsets the impact of the VAT. Given today’s situation, it certainly does. But Rubio is right that small taxes have a way of expanding dramatically under Democrats. Rubio added that Cruz couldn’t get rid of the IRS with his tax plan, and this is also true.
Verdict: Rubio’s right about the VAT, but it’s unclear if his plan is better, given his higher tax rates.
Did Ted Cruz Flip on Immigration? Cruz smacked Rubio hard with what he called the Schumer-Rubio amnesty bill, and rightfully so. Rubio’s answer – that he changed his opinion about immigration law because of ISIS – was downright awful, and Cruz rightly took him to the woodshed, reminding him that Al Qaeda and other terrorist groups have always attempted to exploit our immigration system.
Rubio then struck back with a full catalogue of arguments about immigration:
Ted Cruz, you used to say you supported doubling the number of green cards, now you say that you’re against it. You used to support a 500 percent increase in the number of guest workers, now you say that you’re against it. You used to support legalizing people that were here illegally, now you say you’re against it. You used to say that you were in favor of birthright citizenship, now you say that you are against it.
Some of this is correct. But doubling green cards does not mean legalizing illegal immigrants. It means increasing immigration legally. As for a guest-worker program, Cruz did in fact support an amendment to the Gang of Eight amnesty bill that would have “dramatically increas[ed]” the limit on H1-B guest worker visas from 65,000 to 325,000. It isn’t a full flip – Cruz has never said he wants to stop issuing H1-B visas, he’s just said he wants to delay issuance for 180 days for a background check. But he also says that he now wants to curb increases in legal immigration until we get our unemployment levels down.
As far as legalizing people here illegally, this implies citizenship – but Cruz has never supported citizenship for those here illegally. At best, Cruz said in 2013 that the “11 million who are here illegally would be granted legal status once the border was secured – not before – but after the border was secured, they would be granted legal status.” The goal was to remove the pathway to citizenship; Cruz says he pushed the amendment as a poison pill. That’s plausible, but open to interpretation.
Verdict: Split decision.
Did Ted Cruz Flip on Trade Promotion Authority? Rubio accused Cruz of flipping on the TPA. Cruz did indeed flip on it, explaining to Breitbart, “TPA in this Congress has become enmeshed in corrupt Washington backroom dealings, along with serious concerns that it would open up the potential for sweeping changes in our laws that trade agreements do not typically include.” Just a few months earlier, he wrote in The Wall Street Journal along with Rep. Paul Ryan (R-WI), “We strongly urge our colleagues in Congress to vote for trade-promotion authority.” His position seems to be that he’s pro-free trade, but anti-Obama. That’s not an unfair position, but he did flip.
Verdict: Rubio is correct.
Did Ted Cruz Flip on Crop Insurance and Ethanol? Rubio stated, “ I saw you on the Senate floor flip your vote on crop insurance because they told you it would help you in Iowa, and last week, we all saw you flip your vote on ethanol in Iowa for the same reason.”
This is at least partially true. According to Politico:
The GOP senator from Texas initially voted with fiscal hard-liners to retain $3 billion in crop insurance cuts that were made as part of a budget deal approved in October. After a visit to the Senate cloakroom, Cruz returned and flipped his vote to side with farming interests, which ultimately prevailed. The crop insurance votes were part of a debate on a highway bill, which Cruz opposed on a final vote, calling it fiscally irresponsible.
Politico reports that back in September, Cruz opposed the federal crop insurance program, stating, “I don’t think we necessarily need to be in the business of providing major subsidies to large conglomerate agricultural operations. But there is certainly an important role in providing agricultural stability.”
Rubio neglects to mention that he did the same thing; Politico states, “After taking several minutes deliberating whether to side with farmers, Rubio drew sarcastic applause from his colleagues…”
The claim on ethanol is untrue. Cruz has always supported a phase-out of the Renewable Fuel Standard and introduced legislation on that topic in 2014. He had called for a full end to the ethanol mandate earlier in 2013, but by 2014, his position was clear.
Verdict: Rubio’s right on crop insurance, wrong on ethanol.
Did Ted Cruz Try To Stymie Defense Funding? Rubio trotted out the same attack on Cruz he used in the last debate regarding defense funding: “Every single time that there has been a Defense bill in the Senate, three people team up to vote against it. Bernie Sanders, Rand Paul and Ted Cruz. In fact, the only budget you have ever voted for, Ted, in your entire time in the Senate is a budget from Rand Paul that brags about how it cuts defense.”
As I reported after the last debate, this does not tell the whole story, and it’s not even true. Cruz spokesman Brian Phillips told Politifact, correctly:
Rubio is engaging in the time-honored Washington cartel tactic of budget gimmickry and is suggesting that a reduction in the rate of increase is equal to a ‘cut’ when in fact the Obama and Paul budgets spend more on defense every year. The fact is, in supporting the Paul budget, Cruz did not support a cut in defense spending, but a more responsible rate of increase.
Furthermore, Cato Institute expert Benjamin Friedman pointed out that Cruz voted in March 2015 for Rubio’s amendment to boost defense spending.
And it’s worth noting that Rubio has skipped a vote on the National Defense Authorization Act. As Meredith Shiner of Yahoo! News wrote last month after Rubio made a similar attack:
The NDAA is, as its title indicates, an authorization bill, meaning that it approves programs and general initiatives for the military. It does not fund the military. The troops are funded through the annual appropriations process, and since both men have arrived in Washington, that has been done through larger spending packages that fund the entire government. Both Rubio and the senator from Texas have consistently voted against those bills.
Verdict: Rubio’s wrong, and he already knows he’s wrong.
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